I recently got an email from a local bank. The email stated: “You have been specially selected to apply for a credit card.” It might be flattering to think that you have been ‘specially selected’, but any reasonable person needs to be careful of such offers. First of all you need to ask why have you been selected?

It might be that you have maintained an amount in your bank account that makes you a prime candidate for a loan. That’s really what credit card agreements amount to as they are mini loans that are offered by the bank.

This type of revolving ‘loan’ or credit card agreement is different from other bank loans as the customer decides how much they will use each month. Some months you might choose not to use the card at all or very little while other months you could incur a hefty bill.

Spending more than you need

One of the issues that I have with credit cards is that they can lead to overspending by those with poor spending habits. It takes self discipline to use a credit card wisely. A responsible consumer will use her credit card to pay bills and for emergencies. However some might be tempted to spend more than what they can comfortably afford.

It’s easy to swipe the card but when the bill comes due that is another matter. I have seen some creative maneuvering as persons dig themselves in further debt all to pay off their credit card bills.

The other mistake consumers make is not fully paying off their bill at the end of the month. Those consumers who pay the minimum balance on their cards end up with more debt. This is because they now have to pay interest on the amount that they owe and the cycle of debt continues.

Fraud

Although debit cards are also scammed by fraudsters, credit cards are also very vulnerable. There have been numerous reports of credit card scamming as unscrupulous persons find ways to get and use the credit card numbers and make expensive purchases. Sometimes by the time the fraud is detected the criminals are long gone leaving the consumer to sort it out with the bank.

Whereas it’s true that if the cases have merit, consumers are compensated for fraud but it certainly makes you wary of transacting business using the card especially for online purchases.

I suppose the pros have to weighed against the cons of using a credit card. It can be much better to have that extra cash in between pay cheques but it must be handled responsibly.

So what’s your take? Is it worth it to get a credit card? Let me hear from you!

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